How many times have you been asked to apply for a Kohl’s credit card at checkout? I’ve been solicited more times than I care to remember, but I continue to politely decline the invitation. This review explains why.
The rewards (or lack thereof)
Store cards can be worth it if they reward you every time you shop at the store affiliated with your card. If you’re looking for a steady rewards structure, though, the Kohl’s card may leave you disappointed.
There are coupons given to Kohl’s charge card holders (according to the application site, those coupons are worth 15% to 30% off, and you’ll get them at least 12 times per year). Sure, it can be helpful to have an account so they give you those, but as far as using the card for your purchases, why bother? If you’re getting the coupons just for having the account open, there’s no reason to actually use your card more.
Instead this is what I recommend doing:
- Have a Kohl’s credit card account open so you receive the coupons. But just don’t use the card to pay for your purchases.
- Use an American Express Blue Cash card because it earns high cash back at select U.S. department stores:
- Bon Ton Stores
- Century 21 Department STores
- J.C. Penney
- Lord & Taylor
- Neiman Marcus
- Saks Fifth Avenue
- Stein Mart
Rewards aside, the biggest reason people fill out the application is probably because they want the 10 or 15 percent off the first purchase. That is a compelling offer, especially if you have a cart full of clothes and the savings would be substantial. But honestly, how much is that going to save you on most occasions? If you’re just buying a sweater and pair of shoes, 15% isn’t going to equal a lot. And even if you are spending a lot (like $500), 15% of that only equals $75, which is still less than what most credit cards give these days for sign-up offers.
The fine print about interest rates
If you carry a balance – ever – the credit card from Kohl’s is going to hurt, and it’s going to hurt bad! At the time of this review, the APR is 23.9%.
To make matters worse, they may give you penalty APR which is even higher – 26.99%. According to the Kohl’s cardmember agreement, they may give you this higher rate if you:
- Make a late payment, or
- Make a payment that is returned
So if you pay on time (but are carrying a balance), you’re paying almost 24% interest and if you make a late payment, you might be paying almost 27%. That just adds insult to injury.
It has very limited utility
Because it’s not a part of a major payment network (like Visa/MasterCard/American Express/Discover) the Kohl’s card can be used only at Kohl’s department stores. So it serves no use anywhere else. It is what is known as a closed loop store credit card as opposed to a general purpose credit card.
Will it look good on your credit report?
Many experts warn that you should avoid store charge cards at all costs. Why? Because every time you apply for a credit card, it results in what is known as a “hard pull” on your credit report. This inquiry is used to check your creditworthiness, but in some situations it can purportedly drop a FICO credit score by up to 10 or 20 points (however after a year, it won’t have any effect). This is why accounts should be opened sparingly and only when it’s a credit card you really want and can use everywhere.
The bottom line is this…
Despite my negativity, I agree the Kohl’s charge card has a couple valid uses:
- Gaining access to exclusive store discounts and early sales offers. Who doesn’t love coupons? If you’re a regular Kohl’s shopper, they could very well come in handy. Just keep in mind these aren’t always better than the newspaper and online coupons you can get without the credit card.
- Credit building. The minimum credit score needed for a Kohl’s card application to be approved is not public information. However if I had to make an educated guess, I would estimate the minimum score is in the mid-600’s. Whatever it may be, it’s safe to say that their card is easier to get than a major credit card. So if you have bad credit and are looking to rebuild, getting an account with Kohl’s is one of the steps you can take.
This review was written or last updated January 15, 2016